Consumer spending in the U.S. remained flat in the last month of 2015, according to the Commerce Department, which released the data on February 1. But while spending throttled down during the holidays, savings reached a three-year high.
For the year, the Commerce Department reported that consumer spending increased 3.4% after increasing by 4.2% the previous year. Spending in the fourth quarter of 2015 slowed to a 2.2% annual rate from 3% in the third quarter.
The consumer spending figures for the month fell in line with economist estimates. Spending had increased .5% the previous month.
Consumer spending accounts for more than two-thirds of economic activity in the U.S., and contributed to the economy’s overall growth of .7% for the last quarter of 2015. “Spending momentum slowed as 2015 drew to a close and enters the year on a weaker note,” said Jennifer Lee, senior economist at BMO Capital Markets, in a statement to the Associated Press.
Meanwhile, income in 2015 was up 4.5%, the largest increase since 2012. The combination of increased income with flat spending caused savings to rise significantly in December to $753.3 billion from $717.8 billion in November, a savings rate of 5.5% of after-tax income. This is the highest level of consumer savings since December 2012.
Lee also pointed out that the healthy rise in consumer savings could lead to spending growth in 2016. Economists predict that improvement in the job market will spur spending and bring economic growth back above 2% for the first quarter of this year.